ALERT: Department of Labor increasing employee benefit plan audits; urges plan sponsors to choose external audit firms carefully.
April 4, 2016
The Department of Labor appears to be sending employers two parallel messages based on its hiring trends and a 2015 DOL study of employee benefit plan audit quality. Both messages are critical to help plan sponsors avoid potentially significant penalties for noncompliance.
Increase in DOL audits
An increase in DOL auditors means a likely increase in ERISA audits for plan sponsors – so even if you haven’t faced a DOL audit, your chances of doing so are now higher. Now is the time to make sure your retirement plan is in order and can sustain a rigorous DOL review.
While an IRS audit may be more feared, DOL audits can result in serious fines and penalties for plan sponsors found to be non-compliant with ERISA law. A more aggressive DOL approach to auditing and enforcement means plan sponsors should carefully review all aspects of their retirement plan and be ready to respond to DOL inquiries with a current plan document, summary plan description (SPD), documentation of compliance with the plan’s document, participant notices, fee disclosures, investment monitoring and prudence, and a process to ensure ERISA regulations are followed.
Employee benefit plan audit firm selection
The DOL’s own study of CPA firms auditing employee benefit plans found a link between the quality of the audit and the number of employee benefit plans the CPA firm audited. The larger the firm’s employee benefit audit practice, generally the fewer audit deficiencies found. The DOL’s 2015 study shows that 93% of the CPA firms surveyed conducted fewer than 24 plan audits per year. Per the study, “There is a clear link between the number of employee benefit plan audits performed by a CPA and the quality of the audit work performed.”
DOL findings suggest that when choosing an employee benefit plan audit firm, plan sponsors should ask about the firm's:
- Number of plans audited
- Training specifically for employee benefit plan auditing
- Membership in the American Institute of Certified Public Accountants (AICPA) Employee Benefit Plan Audit Quality Center
What if I have questions?
For more information about DOL audits or choosing an employee benefit plan audit firm, please contact AGH assurance vice president Aron Dunn, who heads the firm’s employee benefit plan audit practice, or AGH senior vice president of employee benefit services Brad Bechtel using their information below.
Agribusiness Team Leader
Aron Dunn devotes a significant part of his practice to serving agribusiness clients and leads AGH’s employee benefit plan and agribusiness teams. He has special-project background in employee benefit plan audits, mergers and acquisitions and refinancing.
Dunn is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants (KSCPA). He served as the youngest-ever KSCPA chair, now leads KSCPA’s Auditing and Accounting task force and the Peer Review Process Improvement Task Force, and is a past president of the Wichita Chapter of the KSCPA. He is a member of AICPA's Accounting & Review Services Committee.
Senior Vice President
Employee Benefit Services
Brad Bechtel leads AGH’s employee benefit services (EBS) division, which serves clients nationwide. EBS is one of the region's largest providers of retirement plan recordkeeping services for daily valuation plans. The division provides consulting services to clients on employee benefit plans including plan design, implementation, operation, fiduciary due diligence, compliance, and through affiliate AGH Wealth Management, discretionary and non-discretionary investment fiduciary services, investment advisory services and employee education.
Bechtel is experienced in executive compensation, including non-qualified, phantom stock, top hat, and excess benefit plans as well as other deferred compensation approaches. He has consulted for numerous Fortune 500 corporations on investment management and fiduciary due diligence. He also provides search and selection due diligence consulting services for companies seeking new investment and recordkeeping providers for their qualified plans. Bechtel is a registered investment advisor who holds Series 7, 24, 63 and 65 FINRA registrations, and he is a member of the American Society of Pension Professionals & Actuaries.
Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.